A global survey of mid-market M&A advisers by IR Global and the Alliance of M&A Advisors has found that an overwhelming majority of respondents believe that mid-market M&A activity (deals valued at up to $500m (£416m) will increase or stay the same during the next 12 months, while there is confidence that cross-border deals will hold up.

There is also a change on where investment funds originate from as out-bound investment from Asia to the US, UK, Australia, Germany and Japan is increasing, demonstrating how emerging to developed investment is closing the gap on developed to emerging deal flow.

The uncertainty surrounding Brexit has been forecast to cause serious problems for the UK economy. Foreign direct investment is predicted to fall as the UK is no longer able to offer investors access to the important European market.

This concern is reflected in the survey, as 85% of respondents identified economic uncertainty as a major factor likely to reduce M&A activity during the next 12 months, while 62% said volatility in global markets.

Brexit is already materially affecting some investors who have started to make plans to boost investment in continental Europe, rather than the UK.

The decision will also have influence outside Europe, particularly for those M&A deals relying heavily on leverage.

Lenders across all forms of debt are set to be cautious during the next 12 months, making funding anything other than top quality deals without significant equity more difficult.

Accountant Michael S Roberts, principal of Roberts McGivney Zagotta in the US said: ‘Some of my clients with excess capital to deploy may take advantage of the situation with selling prices depressed, but most who rely on leverage will find it more difficult.

‘I think Brexit translates to the global lending environment, so lenders here in the US will also become more conservative.’

Wider concerns about the global economy overshadowed any concerns Brexit was the least significant factor in terms of overall issues likely to reduce mid-market M&A activity. General economic uncertainty and volatility in global markets were the over-riding concerns, followed by access to finance and regulatory concerns.

Post-closing integration issues is the area that clients most often neglect when preparing for a deal (64%), while on cross-border deals, most problems occur during the due diligence process (52%) and post-closing integration (47%).

Over half (56%) of global respondents named country culture and differing business practices as their main concerns when advising on cross-border deals.

Thomas Wheeler, group managing director of IR Global, said: ‘Mega mergers make the headlines but the engine room of the M&A industry is in the mid-market, where thousands of deals are completed annually of varying sizes, from less than $10m through to $500m.

‘Our survey shows optimism for growth in this type of M&A activity despite the political and economic instability we have seen of late. It also shows an appetite for cross-border deals in the private market with the need to create new opportunities in emerging markets of paramount importance for independent advisers.’

The Vanishing borders: how the private M&A market is making global gains report is based on responses from 279 global M&A advisers.